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Lott Company uses a job order cost system and applies overhead to production on the basis...

Lott Company uses a job order cost system and applies overhead to production on the basis of direct labor costs. On January 1, 2017, Job No. 50 was the only job in process. The costs incurred prior to January 1 on this job were as follows: direct materials $ 22,400 , direct labor $ 13,440 , and manufacturing overhead $ 17,920 . As of January 1, Job No. 49 had been completed at a cost of $ 100,800 and was part of finished goods inventory. There was a $ 16,800 balance in the Raw Materials Inventory account. During the month of January, Lott Company began production on Jobs 51 and 52, and completed Jobs 50 and 51. Jobs 49 and 50 were also sold on account during the month for $ 136,640 and $ 176,960 , respectively. The following additional events occurred during the month. 1. Purchased additional raw materials of $ 100,800 on account. 2. Incurred factory labor costs of $ 78,400 . Of this amount $ 17,920 related to employer payroll taxes. 3. Incurred manufacturing overhead costs as follows: indirect materials $ 19,040 ; indirect labor $ 22,400 ; depreciation expense on equipment $ 13,440 ; and various other manufacturing overhead costs on account $ 17,920 . 4. Assigned direct materials and direct labor to jobs as follows. Job No. Direct Materials Direct Labor 50 $ 11,200 $ 5,600 51 43,680 28,000 52 33,600 22,400 Calculate the predetermined overhead rate for 2017, assuming Lott Company estimates total manufacturing overhead costs of $940,800, direct labor costs of $784,000, and direct labor hours of 22,400 for the year. (Round answer to the nearest whole percent, e.g. 25%.) Predetermined overhead rate % Open job cost sheets for Jobs 50, 51, and 52. Enter the January 1 balances on the job cost sheet for Job No. 50. Job No. 50 Date Direct Materials Direct Labor Manufacturing Overhead Beg. $ $ $ Jan. $ $ $ Cost of completed job Direct materials $ Direct labor Manufacturing overhead Total cost $ Job No. 51 Date Direct Materials Direct Labor Manufacturing Overhead Jan. $ $ $ $ $ $ Cost of completed job Direct materials $ Direct labor Manufacturing overhead Total cost $ Job No. 52 Date Direct Materials Direct Labor Manufacturing Overhead Jan. $ $ $ Prepare the journal entries to record the purchase of raw materials, the factory labor costs incurred, and the manufacturing overhead costs incurred during the month of January. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Account Titles and Explanation Debit Credit (1) (2) (3) Prepare the journal entries to record the assignment of direct materials, direct labor, and manufacturing overhead costs to production. In assigning manufacturing overhead costs, use the overhead rate calculated in (a). (Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Account Titles and Explanation Debit Credit (1) (2) (3) Total the job cost sheets for any job(s) completed during the month. Prepare the journal entry to record the completion of any job(s) during the month. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit Prepare the journal entries to record the sale of any job(s) during the month. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Account Titles and Explanation Debit Credit (1) (To record sale of jobs) (2) (To record cost of jobs) What is the balance in the Finished Goods Inventory account at the end of the month? What does this balance consist of? Finished Goods Inventory $ What is the amount of over- or underapplied overhead? Manufacturing Overhead $ Question Attempts: 0 of 15 used Save for later Submit Answer

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Expert Solution

Predetermined overhead rate = $940800/$784000 = 120% of direct labor cost

Job No. 50
Date Direct Materials Direct Labor Manufacturing Overhead
Beg. 22400 13440 17920
Jan. 11200 5600 6720
33600 19040 24640
Cost of completed job
Direct Materials 33600
Direct Labor 19040
Manufacturing Overhead 24640
Total cost 77280
Job No. 51
Date Direct Materials Direct Labor Manufacturing Overhead
Jan. 43680 28000 33600
43680 28000 33600
Cost of completed job
Direct Materials 43680
Direct Labor 28000
Manufacturing Overhead 33600
Total cost 105280
Job No. 52
Date Direct Materials Direct Labor Manufacturing Overhead
Jan. 33600 22400 26880
No. Account Titles and Explanation Debit Credit
1 Raw materials inventory 100800
Accounts payable 100800
2 Factory labor 78400
Factory wages payable 60480
Employer payroll taxes payable 17920
3 Manufacturing Overhead 72800
Raw materials inventory 19040
Factory labor 22400
Accumulated depreciation-equipment 13440
Accounts payable 17920
No. Account Titles and Explanation Debit Credit
1 Work in process inventory ($11200 + $43680 + $33600) 88480
Raw materials inventory 88480
2 Work in process inventory ($5600 + $28000 + $22400) 56000
Factory labor 56000
3 Work in process inventory ($56000 x 120%) 67200
Manufacturing Overhead 67200
Account Titles and Explanation Debit Credit
Finished goods inventory ($77280 + $105280) 182560
Work in process inventory 182560
No. Account Titles and Explanation Debit Credit
1 Accounts receivable 313600
Sales revenue ($136640 + $176960) 313600
(To record sale of jobs)
2 Cost of goods sold ($100800 + $77280) 178080
Finished goods inventory 178080
(To record cost of jobs)
Finished Goods Inventory: $   105,280 Job No. 51
Manufacturing Overhead: $         5,600 Underapplied

Manufacturing overhead incurred $72800 - Manufacturing overhead applied $67200 = Manufacturing overhead under-applied $5600


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